6 Catalysts Bank Stock Investors Should Watch In 2021

Rising interest rates and economic stimulus have been a winning combination for bank stock investors in recent months. Since the beginning of November, the Financial Select Sector SPDR Fund XLF is up 39.1% and the SPDR S&P Bank ETF KBE is up 54.5%.

On Monday, BofA Securities analyst Erika Najarian said the month of March and the remainder of 2021 will have plenty of significant catalysts for bank stocks.

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SCB Notifications: The first major catalyst just around the corner will come by the end of March, when the Federal Reserve Board will notify U.S. banks whether or not their stress capital buffers will be recalculated. The Fed may elect to recalculate a bank’s SCB requirement once the bank resubmits a plan.

Najarian said banks like M&T Bank Corporation MTB, Citizens Financial Group Inc CFG, Wells Fargo & Co WFC and PNC Financial Services Group Inc PNC have the most riding on the SCB requirement notifications.

“That said, given the June 2021 DFAST around the corner, a revised SCB will likely only impact 2Q21 buyback plans (if at all),” the analyst said. 

Other Bank Stock Catalysts: Here’s a look at the six bank stock catalysts that Najarian is watching in 2021:

• March 31: SCB Requirement recalculation notifications.
• April 5: Annual CCAR submissions due.
• June 30: Fed notifies banks of preliminary SCB requirements.
• Aug. 31: Fed notifies banks of final SCB requirement.
• Oct. 1: Final SCB requirement becomes effective.
• Oct. 13: Randy Quarles’ term as vice chair for supervision ends.

Earlier this year, Najarian named Citigroup Inc C, JPMorgan Chase & Co. JPM and Fifth Third Bancorp FITB her top large-cap bank stock picks for 2021.

Benzinga’s Take: Banks will likely continue to deal with historically low interest rates weighing on net interest margins in 2021 and beyond. Yet bank balance sheets are far more healthy in 2021 than they were back in 2010 during the recovery from the last economic crisis.